Colombier Acquisition Corp. (NYSE:CLBR) has entered into a definitive agreement to combine with values-based marketplace PublicSq at an enterprise value of $258 million.

PublicSq is developing an app-based marketplace for political conservatives in the US to seek out products aligned with their values.

The combined company is expected to trade on the NYSE under the symbol “PSQH” once the deal is completed in the third quarter of 2023.

Transaction Overview

Colombier has an estimated $173.5 in its current trust and has not yet supplemented this with additional committed capital. PublicSq expects to add $158.5 million to its balance sheet through the deal after footing $15 million in transaction expenses.

In a zero-redemptions scenario, existing PublicSq investors would pass into the minority with 48.1% of the combined company’s equity while public Colombier shareholders take 41.5%. The SPAC’s sponsor would see its promote shares convert to a 10.4% stake.

Quick Takes: There have now been enough SPAC deals with platforms offering politically conservative alternatives to for like-minded consumers to declare it a trend that is unlikely to go away any time soon.

As long as at least some are successful, there will be attempts recapture the same lightning in the bottle. And, in some respects the movement is following in a model set by the wave of ESG investments made in recent years. That growth was similarly driven by the fact that consumers and investors of a particular ideological leaning wanted to see their money put more towards causes they saw as doing good.

Political polarization in the US has driven plenty of energy in the conservative direction as well, with political leaning already determining what media people are likely to consume. Now, with major brands frequently caught in the cultural wars over social issues and individual state and federal laws, there is presumably money to be made in funneling commerce towards the those on the conservative side of the argument.

But, that’s where this trend differs from ESG. Much of the ESG momentum came first from companies and investment funds managing their exposure to fossil fuels and various other industries considered harmful. This was as much in response to regulatory and legislative movements towards taxing carbon and incentivizing green investments as it was from consumer pressure.

As such, ESG has plenty of top-down momentum, and while its conservative counterpart may have plenty of bottom-up excitement from consumers, it’s remains to be seen if that can translate to adequately funding businesses aiming to capitalize on the trend.

SPACs’ involvement in the play has been a mixed bag thus far. Digital World’s (NASDAQ:DWAC) pending combination with Trump Media and Technology (TMTG) in October 2021 demonstrated the short-term potential for SPACs interested in dipping their toes as the SPAC soared to $175 in the rush of investors hoping to get in (or assuming others would).

But, like, many of these companies, TMTG was little more than an idea, a WeWork office and one eye-catching name at the time. Digital World nonetheless pulled together a $1 billion PIPE for the deal two months later, a feat that would perhaps only be possible in the market conditions of the time.

Nonetheless, the TMTG does not appear to be greatly closer to completion than it was at that point having had its proxy under SEC review since May. But, the copycat deals it may have inspired have been moving ahead unheeded.

One month after Digital World announced, SilverBox I unveiled a combination with Black Rifle Coffee (NYSE:BRCC), a DTC and coffee shop brand catering to veterans and gun enthusiasts. CF VI followed two months later with conservative social media platform Rumble (NASDAQ:RUM), while DHC (NASDAQ:DHCA) joined in July 2022 with its announced deal with GloriFi, which proposed making conservative-aligned financial services products.

This last deal showed trouble early on and the company began winding down its nascent operations just months after the announcement before the deal was formally terminated in January.

That leaves the trend in uncertain waters. Black Rifle has skimmed below profitability since closing but is still performing well relative to the de-SPAC average, last closing at $6.82 while Rumble last closed at $8.56. But, for whatever else these companies were at the time of their deals, they were also operating businesses with real revenues being generated.

As with GloriFi, it does not appear that the same can be said of PublicSq. Founded “in a garage” in the first quarter of 2021, the company developed a prototype of its app towards the end of that year and launched it nationwide in the third quarter of 2022. It is now working to launch the beta version of its 2.0 product this quarter.

The basic idea of the app is to get as many conservative consumers on it as possible so that it can track their viewing and spending habits. With that data in hand, PublicSq aims to point these consumers towards brands aligned with their values and create its own branded products it can sell to them through a DTC model.

So far, the app has gathered 450,000 active accounts and about 40,000 businesses are participating in some form or another. It has also tapped about 350 influencers to be brand ambassadors to drive outreach including Donald Trump Jr. and Charlie Kirk.

In other words, it is something of a marketing app in search of a product. PublicSq’s presentation promises to launch its first DTC brand by the midpoint of 2023. It appears unlikely that this will be an in-house production, however, and more likely a generic high-volume product produced elsewhere that PublicSq can slap some branding on.

The company also expects to generate subscription fees from businesses seeking to be featured on the app (after confirming they “respect the core values of PublicSq” and “will not support causes that are in direct conflict with [PublicSq’s] core values”). It also aims to run an overarching loyalty program for consumers using the app.

Still, PublicSq appears to still be in “if we build it, they will come” territory, and has not demonstrated it has the internal technological know-how to replicate some of the marketplaces it says it seeks to emulate like Amazon (NASDAQ:AMZN), Yelp (NYSE:YELP) and Etsy (NASDAQ:ETSY).

But, if the thesis is that excitement begets excitement, there are still some signs that the play is alive, as Colombier is up about +1% in the premarket on the news.

Click here for the full investor presentation.

ADVISORS

• Ellenoff Grossman & Schole LLP is serving as legal advisors to Colombier.
• Eversheds Sutherland LLP is serving as legal advisors to Colombier.
• Wilmer Cutler Pickering Hale and Dorr LLP is serving as legal advisor to PublicSq.